Our guide to Stocks and Shares ISAs

Making sense of ISAs

ISA stands for Individual Savings Account — an account that lets you to save or invest your money without paying tax on the interest you earn.

There are several types of ISA, the main types are — a Cash ISA, a Stocks and Shares ISA and an Innovative Finance ISA — which of these is right for you will depend on your savings goals and the level of risk you’re comfortable taking with your money.

Every tax year, HMRC gives you an ISA allowance. This is the maximum you can pay into one or more types of ISA in that year. It’s worthwhile making the most of this allowance if you can, because it can’t be carried over to the next tax year.

NEW Personal Savings Allowance (PSA)

Basic rate tax payers can earn up to £1,000 interest on savings tax free, with a £500 allowance for higher rate tax payers.

What is a Stocks and Shares ISA?

A Stocks and Shares ISA lets you invest in a range of investments such as shares, property and bonds and pay no income or capital gains tax on any returns.

Investing can generate better returns than cash savings if given time to ride the ups and downs of the stock market, although there are no guarantees. That’s why a Stocks and Shares ISA is most appropriate for longer term goals at least five years into the future.

When thinking about whether to invest, it’s important to understand that the value of an investment could go down as well as up and you could get back less than you pay in.

A Stocks and Shares ISA can be opened by any UK resident 18+.

What is a Cash ISA?

A Cash ISA is a savings account with interest earned tax free. They are available to anyone aged 16 or over.

Cash ISAs are usually seen as suitable for short to medium-term savings goals — if you want to put some money away for a holiday, home improvements or car repairs for example.

What is an Innovative Finance ISA?

An Innovative Finance ISA allows you to invest in peer to peer lending schemes without paying tax on the returns or interest. Peer to peer lending is a growing way for businesses and individuals to borrow money without going to a bank.

What is a Lifetime ISA?

Anyone aged 18-39 can put up to £4,000 into a Lifetime ISA every year until their 50th birthday and receive a 25% Government bonus — that’s £1,000 for every £4,000 saved. The money can be used towards a first home or be withdrawn at age 60, tax-free. From tax year 2018/19 if you cancel your Lifetime ISA or withdraw funds from it, there will be a charge of 25% of the amount withdrawn. Eventually the Lifetime ISA will replace the current Help to Buy ISA.

Our Stocks and Shares ISA is provided by Scottish Friendly and your money is invested in the With-Profits Fund.

Is a Stocks and Shares ISA tax free?

A Stocks and Shares ISA is not completely tax free like a Cash ISA, but it is tax efficient. There is no income or capital gains tax to pay on any growth in your investment but income on share dividends is taxed at 10%.

Exactly how tax affects you depends on your individual circumstances and tax law could change in the future.

For those of you that prefer video...

How our Stocks and Shares ISA works

Through a Stocks & Shares ISA you can invest in things like shares and property. They are a very tax efficient way to invest.

The maximum you can put into ISAs this tax year, is a whopping £20,000.

The SunLife My Smarter ISA invests in a mix of shares, property, bonds and cash deposits. You don’t need to be rich or an expert to have one. With this ISA you can invest from just £10 a month or, if you prefer, you can invest a lump sum.

The more money you put into your ISA over time, the more it could grow. So, to make life easier, you can increase your payments automatically by up to 10% each year. But, of course, you can change this if you want, depending on your finances each year.

Your money will be carefully managed by Scottish Friendly, who will do all the work for you. There’s an annual charge of 1.5% of the value of your ISA, which is deducted from your investment.

Before you get started, just be sure you’re happy to put money away long term, say 5 – 10 years, and that you’re happy with an element of risk, as the value of your investment can go up or down and you may get back less than you paid in.

But here’s why this ISA is a little bit special…

If you want, provided you haven’t made any withdrawals, on the 10th anniversary of starting your ISA we guarantee you can take out at least 100% of the money you’ve put in.

*Inflation will reduce what you can buy in the future.

So you can invest knowing you’ve got this extra reassurance, which you don’t get with most other ISAs!

Stocks & Shares ISAs. Just another thing we’ve made straightfordable.

Reasons to invest in a Stocks and Shares ISA

Over your life, you’ll probably save for many different things in a number of different ways, but a tax efficient Stocks and Shares ISA may actually be an appropriate way to put money aside for all your longer term goals.

Starting out in your 20s and 30s — Be it a house deposit, a wedding or a family car it’s probably going to take time to save for these big-ticket items. If you’re in a position to put money away each month for at least 5 years if not longer, a stock and shares ISA has the potential to generate better returns than cash savings

Prime time in your 40s and 50s — By now, planning for retirement may be your focus. With plenty of working years still ahead of you, investing even a relatively small amount regularly into a Stocks and Shares ISA, can help build up a handy nest egg for your later years

Later life in your 60s and beyond — As you get closer to retirement, it can be worthwhile continuing the make the most of your annual ISA allowance, especially now you can pass on your ISAs savings to your spouse without losing the tax benefits

Frequently asked questions

You have to be a UK resident to open an ISA. For a Cash ISA you must be 16 or over and for a Stocks and Shares ISA or Innovative Finance ISA you must be 18 or over. For a Lifetime ISA, you must be aged 18–39.

You can hold one of each type of ISA in any given tax year — Cash ISA, Stocks and Shares ISA, Innovative Finance ISA and the Lifetime ISA (from 6th April 2017). You cannot hold more than one of a particular type of ISA in a given tax year and you cannot invest more than the £20,000 limit.

Yes, you can access the funds in a Stocks and Shares ISA at any time, but to get the best growth potential you should aim to invest for at least five years and ideally 10 or more. It’s worthwhile keeping some cash savings separately for emergencies.

Choosing the right ISA for you will depend on your circumstances, savings goals, how long you’re willing to put your money away for and the level of risk you’re comfortable taking with your money. If you’re unsure would like some advice go to www.unbiased.co.uk to find an Independent Financial Adviser near you. You may have to pay for their advice.

Here's the information that you need to know about who we are and the other companies that we work with in order to provide our products and services.

Who are SunLife?

Phoenix Life Limited trades as SunLife and is the provider of the Guaranteed Over 50 Plan, SunLife Insurance and the life insurance policy payment option for Funeral Plans. Phoenix Life Limited’s registered office is at 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 1016269).

You can contact us by post at SunLife, PO Box 1395, Peterborough, PE2 2TR or by phone on 0800 008 6060.

If you choose to add Funeral Benefit Option to your Guaranteed Over 50 Plan, Dignity Funerals Ltd arranges and provides the funeral services, registered office: 4 King Edwards Court, Sutton Coldfield, West Midlands, B73 6AP (registered in England and Wales, No. 00041598). Dignity Funerals Ltd is a member of the National Association of Funeral Directors.

Who provides the Funeral Plans?

Dignity Funerals Ltd arranges and provides the funeral services, registered office: 4 King Edwards Court, Sutton Coldfield, West Midlands, B73 6AP (registered in England and Wales, No. 00041598). Dignity Funerals is not authorised or regulated for this activity by either the Financial Conduct Authority or the Prudential Regulation Authority. Dignity Funerals Ltd is a member of the National Association of Funeral Directors.

The life insurance policy that pays for your funeral will be provided by Phoenix Life Limited, trading as SunLife.

Hugh James is authorised and regulated by the Solicitors Regulation Authority (SRA Number:303202).

The information contained on this website is based on Hugh James' understanding of the law of intestacy in England and Wales only as at April 2014. The law in Scotland and Northern Ireland is significantly different. This is for information purposes and is not intended to be legal advice.